defending the cd
i began this as a response to the comment from the man that seeded the last big post, none other than mrg himself. i decided to move this to two new posts mostly because we’re into important territory here – gary’s trying to do something good and important, and we share at least some of the same goals. at the same time, i have some deep, philosophical disagreements with this approach, and in my experience, it’s these differences that can shed the most light on the bigger picture. put on your shades, this could light up fast.
first, a quick thanks to gary for coming into my dark corner of the net and sharing his comments.
this edition is all about the cd, i’ll address some other points later.
anyone jumping in at this point may be well-served (if they have the time) by browsing my own back catalog and gary’s original post and follow ups (1 2 3 4 5). i do try not to repeat myself too much, and tend to weave threads between posts.
the cd may be the “cash cow of the monopoly distribution channel,” but it’s also the salvation of the independent musician… and i’m here to explain why.
the cd is everywhere (and very much not dead)
we may wish the cd were dead, for any of a number of reasons – there are better formats now. better technology. blue lasers. 24-bit samples. 6-channel mixes. smaller packages. lossy compression. lossless compression. drm wrappers. cheap hard disks. new compression formats. networks. whatever your issue – technologists pushing new tech, lawyers pushing drm or audiophiles pushing more bits and more channels – you can find a reason to wish the cd would just go away, but it won’t.
the most important thing about the cd is this: the cd is ubiquitous.
if someone hands me a 12-centimeter polycarbonate disc (that doesn’t come with some funky off-book copy protection gimmick), i know how to make it work. i can make it work almost anywhere because there are millions of gadgets that make it work (call that an “installed base”).
the cd is universally supported, universally available, and well-defined so i don’t have to worry about formats or codecs or channels or bit depth or anything else. if i’ve got an mp3-based portable, i probably can get stuff from a cd into mp3. if i’ve got an ubergeek ogg-based home-networked stereo system, i probably have some clue how to get from cd to ogg.
if i want to make sure that anyone who wants my music can actually listen to my music – online or offline, asia or africa, on a stereo or on a portable or in a car or on a computer, then i have the power to do that with a cd. it just works, for anybody. this is absolutely critical, and it’s something the independant, unfunded, still-working-the-day-job musician can’t get anywhere else.
i simply don’t think it makes good business sense to walk away from that kind of power and utility. especially now that…
…the cd is cheap
it doesn’t take a six-figure pressing plant to make cds anymore. there isn’t a significant barrier to entry. i can make a cd (that works in all of those millions of cd-playing devices) with a $399 desktop, $49 worth of software and a 30-cent blank disc. (that’s pretty cheap, considering i might be willing to spend two or three grand on a guitar…)
if i need a bunch of them, i can get 1000 packaged cd’s for $2.50 each (yes, i can do better, but i’m being conservative). and, of course, economies of scale do kick in… at 10,000 cd’s, i can probably cut that unit-cost in half.
i simply don’t need a big advance from or the blessings of a label to make cds anymore – and if i do it myself, no record label (or record industry association) can tell me how or where to distribute them.
the cd is flexible
with one chunk of plastic, the musician can give her adoring fans 2 seconds of music or 70+ minutes of music.
she can pick the number of audio tracks (red book cd-audio) and include graphics (red book cd-graphics), text (red book cd-text), midi (red book cd-graphics), still images (photo cd), video (white book), and even computer data and executable software (yellow book).
the specifications are well-designed and well-implemented, and with a little help from a blue book and a multisession cd spec, she can mix and match most of them on the same physical cd.
the industry can’t (and doesn’t) control the cd
let me make up a scenario to illustrate this point, and see if we’re still stuck with a “100,000 units of ‘product’ or perish in a dive bar” decision…
let’s say i’ve got 5 good tracks, and i’ve decided to release just those 5. i should find myself a studio, and let’s make it a good one. steve albini has has done some good work, and he’s down with the struggling musician, so maybe electrical audio1 is a good place to do this. let’s say i’ve rehearsed a lot and i can knock out 3 tracks a day, and i’m ok with studio b ($600/day), and some unknown house engineer ($100/day), and we’ll throw in $250 worth of tape, and $150 per day for three days in chicago (because i don’t live in chicago and i want to get there the day before the session). i just spent $2100!
wait! i have a home video my girlfriend shot of my last show. i can take that to my geek friend with the fancy computer and she can make that into a video file i can throw on cd. add a copy of my website, with contact and booking info – why not? – i’ve got plenty of room on this disc… ok, now i’m happy. i have a 5-track audio cd with some bonus stuff. i can also ask my geek friend make these tracks into mp3’s and put them on the website (and on the cd)…
i don’t want to buy too many cds up front – maybe 1000 – with just a paper sleeve. this2 looks like a cheap indie-friendly musician-oriented dupe shop: 1000 cds for $875.
i’ve spent $3000 and i have 1000 cd’s. now it’s time for me to get creative about what i do with them. i might want to give some of them to my friends. i could put them in promo packages and try to get paying gigs. once i’ve got gigs, i could mention them a few times to the audience that loves me (because i’m just that good) and sell some at $5 each (that’s price-competitive on a track-for-track basis with itunes, and you get the video “free”). i could do some other stuff (i am pretty creative), but if i break it out like this: 300 freebies (for promos and friends) and 700 @ $5 each = $3500, then i’m $500 ahead.
yeah, the margin is only 16%, but hey, i’m not losing money, and i got some paying gigs with these things, so i’m actually much further ahead. it is still hard to get gigs without some sort of recording – the mp3’s on the website or the promo cd’s in the mail. sure, i can play an open mic once in a while, but i’m not going to get paid for that unless i can sell something at the show – like cds.
not happy with those economics? find a friend with a home studio and cut your recording expenses. if you’re creative (and we know you are), maybe you can keep $3 or maybe even $4 from each cd without charging more than $5.
building a level playing field
the cd isn’t such a bad deal for the unsigned independent musician, because they can distribute the cd with the us postal service (for people on the website), cdbaby (for people elsewhere on the web) and from their hand to yours (at gigs) and there is nothing the riaa can do about it. (by the way, i think you get bonus points for sending happy people home from your show with something they can touch, but that’s just my opinion and experience. your mileage may vary.)
a 12cm polycarbonate platter by any other name would work the same – whether it comes from vivendi/universal, a new sun records or the burner on my desk. the recording industry gave us the cd and it pushed it hard enough that it became ubiquitous. this is a gift, and those at the bottom end of the music-business curve should take advantage of it. anyway, that’s how you “make money off the cd” – but, like i’ve said continuously, the formula won’t work for everyone, nor should it.
if you’re looking for a “level playing field” that brings a solo independent musician into the same game as the big record labels (in terms of the constrained attention market, at least) you won’t find a better situation than the 12cm polycarbonate disc.
the high end of the curve will always have an economies of scale advantage over the low end, but consider the real difference between my hypothetical 1000-cd production run at $3/cd and the $2.80/cd budget from albini’s hypothetical example (recording $150k + manufacturing, packaging and distribution $550k = $700k/250k units), it doesn’t get much more level than that.
yeah, but can you eat?
if we have a creative and budget-conscious indie musician, they can probably get their unit costs under those of the big labels. sure, it’s not an entirely fair comparision. the label released cds with 12 tracks, and our independent only has 5 (plus a video), but most of the 12 tracks suck, remember? and they’re selling for $18, while our favorite independent is selling for $5. bottom line: the musicians on the label pushing 250k units come away with $16,125 (or 6.45 cents per cd), and our indie comes away with $500 (50 cents per unit).
you may not be able to buy an mtv-worthy video to promote your track, but cd-for-cd, the game is on and the advantage goes to the low end of the market.
no, you probably can’t feed yourself with a $500 return on a recording project, but the idea is to build on that with paying gigs, other merchandise, and other revenue options.
on the flipside, with some skillful shopping, i can buy 8 packages of ramen for $1, so that’s 4000 packages, or enough ramen to feed a band of three, three meals a day, for a year. did i mention this wasn’t an easy business?
wrap it up
the record labels and the consumer electronics companies built the cd. and they paid for a huge, global infrastructure, designed specifically to be functional, easy-to-use and economic. now that it’s built, it would be foolish not to try to use it.
i look at this as “using the tools that the recording industry wrought against them” – you might call it turning the tables.
1, 2 i’ve not done business with these companies – this isn’t an endorsement, just current examples.
update: yes, this is grossly simplified. i tried to keep about as much detail as the reference example from steve albini.
But that’s exactly what I was talking about when I said we would spawn a new industry that legitimizes bootlegging singles. Right now, you can’t create that CD for that price: Studio time alone is huge, and unless the disc is properly mastered, no one is going to inject it into the ‘proper’ sales channels. My muscian friends typically spend $5000 to produce too man discs that are obsolete before the ink is dry on the sleeve inserts.
You might have Internet, but your neighbour doesn’t or your car doesn’t, so you burn the tracks you download, and yes, you put them on the CD technology to give one to your neighbour (or sell for some small fee) but
the cost is low because they could just do it themselves, if they had the bandwidth.
and in my system, the band doesn’t mind if your neighbour makes more copies, which could be CDs, they could be IR pulses beamed between handheld MP3 players, but since the musicians don’t have to recoup $5000 production costs, or $50,000 production costs, or $5M in production costs, there is no loss, there is only benefit because now, for the cost of your one download, there are now three new fans who might show up at Sneaky Dees next time that band is booked.
Now, you have a CD. How old is it? Do you still play like that? Really?
What if instead of $800, you spent only $80 this month, and you do the same next month, and the next … less than a nice dinner for two in my neighbourhood and what we have after one year is a CD worth of material that incrementally tells me the story of you as an artist, and each song might find a different audience, positioning you as the bridge between those bubbles.
And as for tracks that suck … here’s the scene, at Mike’s house, a bassist who’d played with Chuck Berry among others, fine session guy, and me, I’m broke, as usual, doing my evil soundscapes experiements, with about 50 fans and sales in the single digits and I’m sitting on the sofa and Mike comes up and tosses an LP at me and says, “You want this? I can’t stand this crap” — it was an original pressing of the Plastic Ono Band, featuring Ornette Coleman and 3/4rds of the Beatles, I had the Lennon companion disk, but never could find this one, and here it was, being discarded in my direction. I almost kissed him (not really) and Mike says, “Hey, don’t make a big deal of it, just get it out of my house!”
And then there’s the folkways records. Who would put Screamin’ Jay Hawkins on the radio today? How about the seniors at your local legion hall who just so happen to be the last remaining archive of the songs that your forefathers brought to that place, songs you’ve never heard, songs you might someday want to breathe some new life into and amaze the world — don’t forget, those old songs didn’t have one super hot-shot composer, they were all workshopped, opensource collaborations by musicians who met every weekend in the pub with “Hey listen to this!” and “Y’know, if you tweaked this a bit, it would really burn” over and over for decades until the song gelled. CreativeCommons is a different issue, but in your model, who’s going to spend $800 + coordination and transport costs to haul all those seniors into the studio to record every last song only to discover that most of them only know the Achy-Breaky Heart?
But think for a moment: How did I know you were reviewing my plan? How did I end up in your “dark corner of the net” to leave these comments?
What if you were a band? If you were, and you are, you are still sitting on $3000 worth of last year’s CDs, but had you posted audio tracks on your blog instead of discourse, I might be playing your songs to my friends here and saying, “Y’know, they’d be a good band to bring up for Summerfolk next summer …”
And who knows, I might also have put you on a compilation Audio-CD of “Bloggers who Rock” and made a few bucks flogging them on eBay doing you a favour by making your band known internationally. Or I might have only blogged about how cool your track was and helped drive the Blogdex in your direction. Lots of new options pop up, options that aren’t there when it’s going to cost you a thousand just to pop into the game for a blink of an hour.
Comment by mrG — November 4, 2003 @ 5:46 pm
i hate to be terse, but i just wrapped up a very long post, and i’m running a bit short on consonants for the day.
your comment really doesn’t address anything i brought up about the value proposition of the cd, particularly for the independent musician. yes. “right now” i can create that cd for that price.
i can’t speak about your friends who spend too much money recording cds. i demonstrated, i think fairly well, that it could be done for $3000, and that it could be profitable for the musician, even at an outrageously low (for the riaa) and internet-distrubution-competitive price point.
yes. now i have a cd and i need to find 1000 people to give them or sell them to. this is part of the business of the music business. for some musicians, in some circumstances, i have provided a profit-making cd-based low-volume example. if the band doesn’t have 1000 fans that can afford $5, maybe it’s not such a good idea to get 1000 cds. but if it is a good idea, it can be done.
how did you find your way here? essentially, i told you i was reviewing your model (ping!). perhaps more interesting, is how did i find you and your model?
this may sound a bit harsh, but if a band can’t come up with a few grand to launch themselves into the wonderful world of the music business, then they are probably better off keeping their day jobs. the barriers to entry are now so low as to be irrelevant. nobody ever promised a musician a free (or easy) ride. they don’t call them starving artists who are payin’ their dues for nothing.
music doesn’t become obsolete – as long as someone loves it, it’s never, ever obsolete.
Comment by roj — November 5, 2003 @ 9:27 pm
Not having any pretensions to musician-ship, I’ll throw in two quick comments from the analyst and listener point of view:
- Obsolete technologies with a large installed base can have a very long lifetime. Remember that installed base is not just tracked in terms of hardware units, but consumer habit and social patterns. NTSC video and the CRT have been functionally obsolete for a long time, but…
- I agree wholeheartedly with the idea that a CD is a good ‘take-away’ for a fan of artists at small concerts and festivals, something that’s become more clear to me now that I’m dropping my $ there, rather than with the RIAA. If I went to see a big act, I’d get reinforcement of that relationship from airplay and other promo. For the small act, the CD is a physical memento of the experience. Yes, I rip it when I get home, but the full res original is still around, and I can drag it out to look at liner notes, artist lists, etc. It’s one of the few ways the small act can keep an ongoing presence with a fan.
(But do the MP3s, too, of course.)
I’ll also mention that though I’ve never been part of the production of a music CD, I was producer on a couple of early data CD-ROMs, and the drop in capital required is stunning. The first premaster system I used cost $250,000.
Comment by Tim — November 7, 2003 @ 9:02 pm
i didn’t want to dwell too much on consumer habit, if only because the recording industry has managed to manipulate habits and expectations of its customers from one format to another over the years – lps, 8tracks and cassettes… (and they’ve blown big piles of cash trying to push other formats along the way). i think there’s a big difference with the cd because the cd “got away” from the recording industry and found other applications.
today, and for at least several years into the future, i think the cd represents some great advantages at the low end of the music business – i think it’s more a question of what’s appropriate for a given musician/audience and how well they (the musician) leverage the format if it’s appropriate. for some musicians, the cd can build and reinforce the relationship, and that’s where all the value happens.
there’s just nothing quite like replacing a $250k system with a $500 pc to “level the playing field”
that’s a great reference point…
thanks for visiting…
Comment by roj — November 7, 2003 @ 9:22 pm
I hear on the grapevine now that Warner and EMI are planning a merge, leaving America with just three big labels — how do you intend to get that CD played on the monopoly radio circuit or into the local record stores in that sort of climate? As I said, sure the CD might be a convenient package, but when you spent that $3000 on the CD, did you see any ROI? Musicians I know sell their CDs for a loss, and the few lucky ones have a manager who has international connections to hit some random spots on the planet.
But if the band instead produces one track every month, and releases those as they happen, they are pinging the weblogs every month, re-inforcing their presence. The net publicity is 10 times as much as that one shot “CD party announcement”.
At the end of 10 months, they have a CD sampler they can give away for free at their concerts, in two years, they have a Greatest Hits, and while the quality may not be Hollywood-scale, no matter, next year they will have 36 tracks to pick from; every concert can have a unique mix, and because of the 10x increased audience pinging, maybe their shows will sell out so often the venues will also pay them a bit more.
Comment by mrG — November 8, 2003 @ 7:56 am
there are still questions about both pending mergers – the sony/bmg combination and the warner/emi combination. i’m not going to make any predictions about one or both of them surviving regulatory restrictions, so we could end up with five, four or three “major labels” when this is over.
yes, in the example i gave here, i showed a 16% roi on the $3000 cd. your mileage may vary.
i didn’t include any “cd party announcement” and didn’t suggest how they might sell 700 of those 1000 cds – that’s something too particular to each band and audience to generalize into an example.
the rest of this, i addressed in the second post – see “back to plan g”
Comment by roj — November 8, 2003 @ 9:26 am
Re: statistics and articles
i don’t know anything about you, your music or this particular project, but i…
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